After feeding the pigs and finding Ethel's duck, you venture out of town.
Find AlkTree Nuts
Be sure to switch your weapon back to your fist for when you encounter enemies. You wouldn't want to throw pig feed at them. Or maybe you would. But punching them would be more effective.
Head east. You will soon find some pillbugs. These are easy to defeat. Just punch them. They don't move very quickly, so it is easy to stay out of their way. If they touch you, they hurt you. Sometimes when you kill them, they leave behind hearts.
After the screen where you killed the three pillbugs, go south until you find a tree with a bunch of little nuts on it. Kill the pillbug nearby, then punch the tree to make AlkTree Nuts fall off. You can get infinite nuts from the tree. They replenish a small amount of health if you equip them and use them like you would a weapon.
Go Back to Town
Head north from the tree and you will encounter Milder Flatstomp harassing Lyna. After they leave, return to town and go back to your house to discover that it is on fire. Go inside. After a cut scene, you automatically go outside, and there will be another cut scene. Eventually the house will no longer be on fire.
Go to the exit of town and talk to the guard. He will say that there is a letter for you at your house. Go back to your house and you will automatically read the letter (automatically eating the pie on the floor if you didn't earlier.) The letter is from your Aunt Maria in Terris, which is west from here. A map is enclosed.
Now exit town, then go east, and head northeast. Eventually you reach a screen with a wooden sign near the top that mentions Wizard Martridge. Go north from this sign. Keep going north to find a small house. Go inside and tell Martridge you're worthy. Martridge will tell you to kill the Bonca in the cave to the west. Then he'll make a red potion appear. Walk on it to automatically drink it. It permanently boosts your attack stat.